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THE STATE BANK OF VIETNAM

THE STATE BANK OF VIETNAM

CIRCULAR No.03/2000/TT-NHNN5 OF MARCH 16, 2000 GUIDING THE IMPLEMENTATION OF THE GOVERNMENT�S DECREE No.89/1999/ND-CP OF SEPTEMBER 1ST, 1999 ON DEPOSIT INSURANCE

Pursuant to Article 23 of the Government�s Decree No.89/1999/ND-CP of September 1st, 1999 on deposit insurance, the State Bank of Vietnam hereby guides the implementation of this Decree as follows:

I. OBJECTS AND SCOPE OF REGULATION

1. Objects of regulation by this Circular include:

- Credit institutions and non-credit organizations licensed to conduct a number of banking operations, and take individuals� deposit money in Vietnam dong.

- Individuals depositing money at credit institutions and non-credit organizations licensed to conduct a number of banking operations;

- Vietnam Deposit Insurance.

2. Credit institutions and non-credit organizations licensed to conduct a number of banking operations under the Law on Credit Institutions (hereinafter called the deposit insured for short), which operate on the territory of the Socialist Republic of Vietnam and take individuals� deposit money in Vietnam dong, shall all have to participate in the compulsory deposit insurance.

II. TYPES OF DEPOSIT TO BE INSURED

The deposit money to be insured shall be Vietnam dong deposited by individuals (including residents and non-residents) at the deposit insured, including:

- Demand and time savings;

- Demand and time deposits, including those on personal accounts;

- Money to purchase certificates of deposit and registered bonds, issued by the deposit insured with permission of the competent State body.

Vietnam Deposit Insurance shall not insure those certificates of deposit and bearer bonds issued by the deposit insured.

III. PROCEDURES FOR REGISTRATION OF PARTICIPATION IN DEPOSIT INSURANCE

1. The deposit insured shall have to make registration as follows:

1.1. The time for completion of the procedures for registration of deposit insurance participation shall not exceed 30 days after this Circular takes effect. Organizations, which are granted operation licenses after this Circular takes effect, shall have to complete the said procedures within 30 days before commencing their operations.

1.2. A dossier on registration of deposit insurance participation is composed of:

a/ The card for registration of deposit insurance participation;

b/ The judicial and operational file (the notarized copy) of the deposit insured, including:

- The establishment decision or the establishment and operation license, issued by the competent State body;

- The organization and operation charter;

- The list of members of the Managing Board, the general director (director) and Control Commission;

- The business registration certificate;

- The financial statements for 3 latest years (or for the latest years for organizations being established for less than 3 years), with certification of the competent State management agency or an auditing agency accepted by the State Bank.

Particularly for non-credit organizations licensed to conduct banking operations, they shall also have to send the organization and operation charters or regulations of their parent units or the units of which they are members.

2. The deposit insured withheld from participation in deposit insurance may have its right to insurance restored after fulfilling obligations towards Vietnam Deposit Insurance and getting the competent State body�s written permission for the restoration of its right to take individuals� deposit money. The dossier and procedures therefor shall comply with the provisions of Point 1, this Section.

3. Within 30 days after receiving a full dossier on registration of deposit insurance participation, Vietnam Deposit Insurance shall have to complete the deposit insurance participation procedures for the deposit insured.

4. In the course of its operation, if there�s any change in its operation contents already approved by the competent authority, the deposit insured shall have to immediately notify such in writing to Vietnam Deposit Insurance for supplement to the dossier on deposit insurance participation.

IV. DEPOSIT INSURANCE PREMIUM

1. Annually, the deposit insured shall have to pay Vietnam Deposit Insurance a premium representing 0.15%/year calculated on the average deposit balance of all types of deposit insured thereat.

a/ The deposit insured shall have to calculate and pay premium to Vietnam Deposit Insurance at the prescribed rate. The deposit insurance premium shall be calculated four times a year on the quarterly basis and paid on the last day of the first month of the following quarter (if the payment days fall on weekends, public holidays or Tet festivals, the premium shall be paid on the first working day after such holidays);

b/ The premium amount payable in each period shall be calculated according to the following formula:

(S0 + S3)

-------------------- + S1+ S2

2 0.15

P = ---------------------------------------------- x -------------------

3 100 x 4

of which:

- P is the premium amount payable in the period;

- S0 is the insured deposit balance at the beginning of the payment period;

- S1, S2, S3 are the insured deposit balances at the end of the corresponding months in the period;

- 0.15 : (100 x 4) is the payable premium rate for a period in the year.

c/ Where the deposit insured has to terminate its activities of taking deposit money under a written declaration of the competent State body, such organization shall have to pay the outstanding premium amount calculated to the end of the day the termination decision is issued.

d/ In the course of inspecting the situation on deposit insurance premium payment at the deposit insured, if detecting any inaccuracy in the premium calculation and payment, the deposit insurer shall retroactively collect the premium arrears or reimburse the excess premium amount, and may apply one of the following forms of handling:

- Warning;

- Pecuniary fine on the premium arrears at the level set by the Managing Board of Vietnam Deposit Insurance, which, however, must not exceed the level stipulated at Point 2 below.

2. The deposit insured that breaches the prescribed insurance premium payment time-limit shall not only have to fully pay the outstanding premium amount but also be subject to a fine of 0.1%/day of the overdue premium amount.

3. If 30 days (including weekends, public holidays and Tet festivals) after the insurance premium payment deadline defined at Point 1.a of this Section, the deposit insured still fails to fully pay the deposit insurance premium, the deposit insurer shall have the right to:

- Request the State Bank, credit institution or State Treasury where the deposit insured opens its deposit account to make deduction therefrom unt for payment of the deposit insurance premium. This deduction amount shall also include the fine stipulated at Points 1 and 2, Section IV of this Circular.

- Where the deposit account�s balance of the deposit insured is not enough for the above-mentioned deduction, Vietnam Deposit Insurance shall request the State Bank, credit institution or State Treasury to make deduction therefrom for payment of the deposit insurance premium first then the fine later, and at the same time notify the deposit insured of the payment in writing of the deficit it has to pay.

4. If 90 days (including weekends, public holidays and Tet festivals) after the deposit insurance premium payment deadline defined at Point 1.a of this Section, the deposit insured still fails to fully pay the deposit insurance premium, Vietnam Deposit Insurance shall handle as follows:

- Issuing decision to terminate the deposit insurance and announcing such on the mass media;

- Requesting the State Bank to issue decision to discontinue the mobilization of individuals� deposits by such organization.

Where Vietnam Deposit Insurance decides to terminate the insurance for the deposit insured, it shall continue to pay insurance for the deposit amount which has been insured before the deposit insurance termination decision is issued and this liability shall be fulfilled within 180 days (including weekends, public holidays and Tet festivals) from the date the deposit insurance termination decision is issued, provided that in this period the deposit insured is declared to terminate its operations by the competent State body, and loses its payment capability. This insurance money amount shall include the arising interests calculated till the time the operation termination is declared.

5. The deposit insurance premium collection shall be effected through the headquarter of the deposit insured or by other modes agreed upon by Vietnam Deposit Insurance and the deposit insured.

6. Annually, on the basis of the account settlement of the competent State finance agencies (including the tax agency) managing the deposit insured, Vietnam Deposit Insurance may adjust the total sum of deposit insurance premium to be paid by such organization in the year.

V. RISK MONITORING AND HANDLING MEASURES

1. The deposit insured shall have to send to Vietnam Deposit Insurance the following reports:

a/ For credit institutions:

- The table of calculation of the deposit insurance premium payable on the quarterly basis;

- The quarterly, biannual and annual account balance sheets;

- The reports on evaluation of the operation situation in 6 months and the whole year;

- Other reports as requested by Vietnam Deposit Insurance.

b/ For non-organizations:

- The table of calculation of the deposit insurance premium payable on the quarterly basis;

- The quarterly, biannual and annual account balance sheets;

- The report on evaluation of the mobilization of individuals� deposit money by the inspection and auditing agencies or the relevant reports (if any);

- Other reports as requested by Vietnam Deposit Insurance.

2. The deposit insured shall have to immediately report to Vietnam Deposit Insurance on the following cases where:

a/ It meets with difficulties regarding the payment capability:

- The total of payable money deficit which must be handled;

- The reasons for these difficulties;

- The structure of the insured deposits;

- The possible consequences of these difficulties and remedial measures;

- The proposals towards Vietnam Deposit Insurance and the competent State management agencies.

b/ The deposit insured witnesses the change in the composition of the Managing Board, the Control Commission or the replacement of general director (director).

c/ In addition to the above-said contents, the deposit insured being non- credit organization shall have to report to Vietnam Deposit Insurance in the following cases where:

- It changes its operation strategy and orientation in the major business domains, which are related to the mobilization of deposit money by itself as well as its parent unit.

- It meets with difficulties due to unexpected risks;

3. Within 90 days after the end of the fiscal year, the deposit insured shall have to send to Vietnam Deposit Insurance the following reports:

- The annual assets inventory already ratified by the competent State management agency or the auditing agency accepted by the State Bank;

- The report on its losses and profits.

4. In the course of supervising and inspecting the deposit insured, if detecting that the deposit insured has violated regulations on safety in banking operations or deposit insurance as well as the provisions of this Circular, Vietnam Deposit Insurance may request the deposit insured to take measures to immediately remedy the said violations, and at the same time report such in writing to the State Bank for supervision and handling.

5. Where it deems that the deposit insured�s operations may lead to the loss of its payment capability or a great loss of its capital and assets, or may cause seriously adverse impacts on other credit institutions, Vietnam Deposit Insurance shall report such to the State Bank and at the same time request the concerned deposit insured to promptly take handling measures.

6. Responsibilities of Vietnam Deposit Insurance and State functional agencies for coordination in supervision and management of operations of the deposit insured:

a/ Vietnam Deposit Insurance shall have the responsibility:

- To closely coordinate with the State Bank Inspectorate to promptly grasp the situation on banking operations of the deposit insured;

- To immediately report to the State Bank and the competent State management agencies the relevant contents stipulated at Points 4 and 5, Section V above;

- To report the other relevant contents at the requests of the State Bank and the competent State management agencies;

- To keep secret information on credit institutions according to the current regulations.

b/ The concerned units of the State Bank and Vietnam Deposit Insurance shall have to coordinate with each other in supervising the premium collection, grasping information related to the organization and operations of the deposit insured.

c/ The State Treasuries and credit institutions where the deposit insured being non-credit organizations open their accounts shall have to make deduction therefrom at the request of Vietnam Deposit Insurance.

VI. VIETNAM DEPOSIT INSURANCE�S SUPPORT FOR AND HANDLING OF DEPOSIT INSURED BEING IN DANGER OF LOSING THEIR PAYMENT CAPABILITY

Where a deposit insured is in danger of losing its payment capability but not to the extent of being placed under the state of special control, Vietnam Deposit Insurance, after determining that the continuation of operations of such deposit insured plays an important role in ensuring safety for the whole system as well as for political, economic and social stability may support it in the following forms:

1. Providing support loans to pay the insured deposits;

2. Providing guaranty for special loans of the deposit insured so that the latter may have money to pay the insured deposits;

3. Buying back debts of customers of the deposit insured. Vietnam Deposit Insurance shall buy back only the secured debts.

The application of the above-mentioned support measures shall be considered and decided by the Managing Board of Vietnam Deposit Insurance on the basis of the State Bank Governor�s regulations on capital reallocation, guaranty and buying back of debts.

VII. PAYMENT TO MONEY DEPOSITORS WHEN THE DEPOSIT INSURED HAS TO TERMINATE OPERATIONS AND LOSE THEIR PAYMENT CAPABILITY

When a deposit insured has to terminate operations by a written decision of the competent State body and loses its payment capability, Vietnam Deposit Insurance shall make the payment of insurance to depositors according to the following regulations:

1. Making of a list of depositors:

- Within 15 days after the State Bank issues the decision on termination of its activities of taking individuals� deposit money, the deposit insured shall have to make a list of depositors thereat and send it to Vietnam Deposit Insurance;

- After receiving the list of depositors, Vietnam Deposit Insurance shall, together with the deposit insured, examine such list as well as the money amount to be paid by Vietnam Deposit Insurance to each of the depositors;

- After reaching agreement on the list of depositors and the total sum of money payable by Vietnam Deposit Insurance according to regulations, Vietnam Deposit Insurance shall submit such list to the Managing Board for ratification, which serves as basis for making the payment;

- Right after the list is ratified by the Managing Board, Vietnam Deposit Insurance shall have to announce the payment on the mass media.

2. Registration of insurance reception:

a/ The depositors shall register the reception of insurance. The payment of insurance to depositors shall be conducted at the following places:

- Head office of the deposit insured;

- Head office, branches or representative offices of Vietnam Deposit Insurance;

- Other credit institutions selected by depositors;

- The addresses stated by the depositors in the registration cards. The money transfer charges shall be born by the insured depositors;

b/ The depositors may choose one of the following modes of payment:

- Cash;

- Via-account transfer;

3. Vietnam Deposit Insurance shall make the payment to depositors only when the latter fully meet the following conditions:

- Being included in the list already ratified by the deposit insured and Vietnam Deposit Insurance;

- Having papers proving their lawful ownership over the deposits at the deposit insured (savings books, deposit certificates, valuable papers...) and identity cards or passports;

Where the depositors lose such papers as savings books, registered deposit certificates, valuable papers, passports, identity cards..., the payment of insurance to depositors shall be effected under guidance of Vietnam Deposit Insurance.

4. Payment of insurance money:

a/ Vietnam Deposit Insurance shall have to post up notices on and list of depositors entitled to, insurance payment at the head office and branches of the deposit insured that has been declared to terminate its operations as well as the head office, branches and representative offices of Vietnam Deposit Insurance;

b/ After completing the procedures and related contents mentioned at Points 1, 2 and 3 above, within 15 days, Vietnam Deposit Insurance shall proceed with the payment of insurance to depositors at places already registered by the latter. The payment shall be conducted as follows:

- The maximum money amount to be paid by Vietnam Deposit Insurance to a depositor at the deposit ensured shall be 30 million dong (including principal and interest);

- The depositor that has the total deposit amount (including principal and interest) at a deposit insured equal to or smaller than 30 million dong, shall be paid 100% by Vietnam Deposit Insurance. For the depositor that has the total sum of deposit (including principal and interest) at a deposit ensured larger than 30 million dong, the amount in excess of the above-prescribed level shall be repaid in the course of liquidation of assets of the bankrupt deposit insured according to the Law on Enterprise Bankruptcy;

- Where the depositor is indebted to the deposit insured that has been declared to terminate its operations and loses its payment capability, the insurance payment shall be made after subtracting the depositor�s debts at the request of the deposit insured.

c/ Payment of insurance in other cases:

- If after the registration a depositor wants to change the insurance reception place, he/she shall have to notify such to Vietnam Deposit Insurance. Within 15 working days after receiving the notice on the change of the reception place, Vietnam Deposit Insurance shall make consideration and settlement;

- If for objective reasons, the insurance payee may authorize another person to receive his/her money. The authorized person must have full civil act capacity and produce the proxy with certification of the competent agency prescribed by Vietnamese law, together with his/her identity card or passport;

- If the depositor has left the country to reside overseas or died, Vietnam Deposit Insurance shall fill in the payment procedures under the authorization of the money owner and in accordance with the provisions of Vietnamese legislation on inheritance of properties.

d/ Vietnam Deposit Insurance shall have the right not to pay insurance if having grounds to prove that the deposit amount does not belong to the insured depositor.

VIII. MANAGEMENT AND LIQUIDATION OF ASSETS OF THE BANKRUPT DEPOSIT INSURED

1. Where the deposit insured goes bankrupt, Vietnam Deposit Insurance shall become the creditor of the deposit insured with the money amount it has paid to depositors, and have the right to participate in the course of management and liquidation of assets of the bankrupt deposit insured.

2. The proceeds from liquidation of assets of the bankrupt deposit insured shall be added to the source of operating capital of Vietnam Deposit Insurance.

IX. IMPLEMENTATION PROVISIONS

1. This Circular takes effect 15 days after its signing.

2. The deposit money at the deposit insured mentioned in Section II of this Circular shall be insured from the date the deposit insured registers its participation in deposit insurance and is accepted by Vietnam Deposit Insurance. The sums of deposit to be insured shall be those deposited before the day of participation in insurance, which still have balance on that day, and those arising as from that day. The deposit insured shall have to pay the insurance premium from the date it is accepted. The deposit insurance premium of the first period shall be calculated on the principle stipulated in this Circular and paid under the guidance of Vietnam Deposit Insurance.

3. The heads of the units attached to the State Bank, the chairman of the Managing Board and General Director of Vietnam Deposit Insurance, the chairman of the managing boards and general directors (directors) of the deposit insured shall, within the scope of their functions and tasks, have to organize and guide the implementation of and implement this Circular.

4. In the course of implementation, if any problems or obstacles arise, organizations and individuals that have to implement this Circular shall promptly report them to the State Bank. The amendment and supplement of this Circular shall be decided by the State Bank Governor.

For the State Bank Governor

Deputy Governor
TRAN MINH TUAN